With Easy Comp, Taxpaid Shipments +1.2% in Jan; A Little 2-Mo Mo?  Goin’ against very soft Jan ’18, when taxpaid shipments down 725K bbls, -5.6%, domestic brewers’ shipments up 143K bbls, +1.2% in Jan ’19, estimates Beer Inst economist Michael Uhrich.  That followed 280K-bbl, 2.2% gain in Dec, he reminds, for modest 2-mo roll.  Then too, Q1 last yr should not be hard to top.  In 2018, Q1 taxpaids shed 1.6 mil bbls, 4.1%.

Upstart hard kombucha co, JuneShine, is movin’ fast and thinkin’ big within this bustling sub-segment. Just over 6 mos after launching in San Diego, JuneShine acquired “all brewing assets at Ballast Point’s Scripps Ranch facility,” co announced this morn. JuneShine quickly reached max capacity of 2000-2500 bbls per year after the first handful of mos, co-founder and Chief Creative Officer Forrest Dein told CBN. With purchase of Scripps Ranch, JuneShine will leap to 100K bbls/yr max capacity.

Recall, Ballast Point announced plan to move out of 24K sq-ft Scripps Ranch facility, relocate employees to larger HQ in Miramar and find a “suitable lessee” for Scripps a little over 1 year ago (see Vol 9, #10 issue). In that time, several looked at purchasing the space, CBN understands, tho relatively lengthy time period between then and now suggests not as much serious interest. But as JuneShine looks to boost production “in great volume,” expand geography and personnel, “and also become a best-in-class leader for our product category, it became obvious that this was a timely opportunity,” said co-founder and CEO Greg Serrao in released statement. With much of the equipment and layout already in place, JuneShine expects to open Scripps Ranch for production by April/May and “to the public” by June, while holding onto current San Diego location in North Park neighborhood as well. Scripps Ranch will become JuneShine’s new HQ.

West Coast Focus in 2019; “Ton of Potential” Elsewhere; “More Palatable”; Innovation Pipeline It’s “tough to project what our 2019 will be like,” Forrest told CBN, but plan is to be “aggressive” while also growing “sustainably” and “profitably” for “long term.” Co plans to fill out rest of CA, PacNW and other major cities thruout the west coast this year, while jumping from 18 employees currently to between 40-50 by late summer. JuneShine will “definitely be west coast-focused,” but co sees “ton of potential” in big cities thruout the country where non-alc kombuchas are already more developed. JuneShine intentionally aims to be “more palatable,” brewed with honey and green tea opposed to sugar and black tea. Branding will be more “universal,” focused on “anyone interested in a healthy active lifestyle,” while aiming to be “known for quality and authenticity.” All marketing is created in-house. And co’s already “working on” innovative pipeline of new flavors, some of which are intended to appeal more to beer drinkers, Forrest hinted.

Investor Group Includes Early KeVita Investor, Consumer Goods Execs, Extreme Sports Athletes and More JuneShine also just closed seed round of financing to help fund the facility purchase and expansion plans, bringing on diverse investor group that includes Nick Heldfond, “an early investor in KeVita kombucha,” various consumer goods and talent management execs, as well as list of professional surfers, snowboarders and skaters. Indeed, co looked at seed financing as way “to build a group of experienced professionals that believe in our vision and will join us as partners as we work toward our goal of offering a more sustainable, transparent product at scale,” Forrest stated. Then too, brewmaster Josh Makler previously worked at established San Diego hard kombucha co, Boochraft (see below), as well as Border X Brewing and Novo Brazil Brewing, Forrest confirmed. And Saint Archer founder Josh Landan’s new project, Scout Distribution, is JuneShine’s distributor in San Diego (JuneShine’s branding is even reminiscent of Saint Archer, with surfing/extreme sports emphasized alongside sleek can design).

Boochcraft Hard Kombucha Hit 0.8 Share of San Diego Foodstore $$ While JuneShine has ambitions to become leader in hard kombucha space, it will face influx of newly launched products from big brewers and upstarts alike. And one in particular has already blazed a leading path in San Diego area. Boochcraft hard kombucha grew 72% to $1.4 mil in San Diego IRI foodstores last year. So Boochcraft already snatched 0.8 share of total beer $$ sales in San Diego foodstores (and already had 0.5 share in 2017). Wow! Vast majority of its sales were in San Diego foodstores. Yet co still had 0.44 share of total beer in San Diego MULC. And San Diego made up nearly 3/4 of Boochcraft’s total sales in scans. While hard kombucha’s still very much in developmental stage, Boochcraft already makin’ an impact. Others are lookin’ to follow suit, and fast. As non-alc kombucha already near-$500 mil biz in scans, this sub-segment with alc bevs will be very interesting to watch.

Damning and disturbing allegations of both sexual harassment and assault, brought by current and former employees plus numerous other industry members and associates, leveled against Fred Lee, co-owner of Actual Brewing in Columbus, OH this week. Extensive interviews revealed difficult and sometimes graphic details, included in long exposé published in Columbus Alive weekly paper (an excerpt of which appeared in Columbus Post-Dispatch, owned by same co). Story focuses on accusations made by Natalie Phillips who alleges multiple instances of unwanted advances and assault beginning on night she was hired. “In the course of reporting, Alive talked to eight women who said they were assaulted or harassed by Lee, three companies whose representatives say they no longer do business with Actual due to Lee’s behavior, four former Actual Brewing employees who observed his behavior firsthand and 10 individuals who were either directly told by Lee’s accusers about the assaults and harassment, or offered supporting details on background,” the paper wrote. Comments from area bar-owners and other businesspeople suggest that many have long chosen not to serve Actual beers or do business with the co due to Lee’s actions.

Earlier this week, Actual co-owner and Lee’s wife Mira alerted employees that her husband was stepping down as CEO pending investigation of allegations and that Nicole Felter would take over as acting CEO, according to Columbus Alive. Through his lawyer, Fred Lee denies all allegations. Reports have been filed with Columbus Police as well as with US Equal Employment Opportunity Commission, the paper wrote.

The account is troubling on its face. So is the suggestion, early in the article, that Phillips, who worked in the beer industry for years, “chalked up” Lee’s initial unwanted advance “as yet another in a long line of harassments and indignities that numerous women interviewed for this story described as endemic to the profession,” Columbus Alive summarized. The paper quotes a female retail purchaser who had to explain to an Actual sales rep that she’d “heard stories for years about Fred sexually harassing people, sending inappropriate pictures, and as a recipient of that myself from other people in the alcohol industry, I don’t want to support that at all.” A former female sales rep, who alleged consistent verbal harassment as her reason for leaving the company, is described as being “once passionate about the brewing industry,” but “no longer has an interest in pursuing a career in it.” In the wake of the story being published, other businesses and organizations have come to the support of Phillips, including more choosing not to stock Actual beer any longer. While the #MeToo movement brought to light that women across industries and the world face harassment in many forms, the perception (at least) that such misconduct is particularly rampant in the beer and broader alcohol industry invites further attention and action.

The Brewers Assn really knows how to put on a show, as it ably demonstrated yet again at Feb 5 beer and food pairing dinner at NYC’s Union Square Café (flagship restaurant of Danny Meyer).  A couple dozen mainstream and trade journalists, including Craft Brew News, heard from BA prexy Bob Pease, craft beer program director Julia Herz as well as several smaller craft brewers.  The craft brewers selected for this event exemplified an important evolution of the association. It provides more resources and value directly geared towards smaller craft brewers that are now vast majority of its members.  The largest brewer at the event: Maine Brewing at 18,000 bbls in 2018 (up from 11K bbls in 2017).  In fact, founder Dan Kleban is incoming BA chairman, starting next yr. Lazy Magnolia, at 11K bbls, was first and is still largest Mississippi craft brewer. Co-founder Leslie Henderson is also on BA board.  Gun Hill Brewing in Bronx and Lake Anne Brew House in Reston, VA are each far smaller than that. In particular, Lake Anne sold just 250 bbls and sells all its beer on-site. Founder Melissa Romano highlighted BA’s new taproom membership class.  She gave stats that show why so many taprooms can make it without distribution: rather than get 85 cents a pint through a wholesaler, she said, she gets $7-8 a pint at their brewhouse.

The median size of a craft brewer is now under 600 bbls, Boston Beer founder Jim Koch said in recent speech at BBD Summit (confirmed by BA’s Bart Watson in audience).  And there are over 7,000 of them.  So BA’s evolution towards emphasizing smaller brewers more is natural.  But BA itself is large (with 62 employees) and far more wired politically than it used to be even a few years ago.  In brief remarks, Bob noted that a craft brewer, Bill Butcher of Port City Brewing, would speak the next day to the Small  Biz Committee in the House about the adverse effects of the shutdown, at the committee’s request (see above).  BA also communicated extensively with members of Congress and the Trump Administration about “really, really negative” effects of shutdown on craft brewers.  It is pushing for acknowledgment that TTB and SBA employees that deal with craft brewers are “essential,” even while also understanding more important effects of shutdown (like government workers without pay).   In early 2019, BA also debuted its indy supporter seal, donated $500K to research on hops and barley, and was busy “laying the groundwork to reintroduce” CBMTRA (Craft Beverage Modernization and Tax Reform Act) which happened earlier this week.  So a “pretty good first month of the year,” said Bob.  

Each of the craft brewers had a highly individual story, tied to the local communities from which they sprang.  For example, Rise Up Rye from Gun Hill Brewing is a collab with the cast of Hamilton.  Gun Hill’s out of the way Bronx location is “both a blessing and a curse,” said founder Dave Lopez.  At same time, both BA and brewers made sure to reinforce point that craft “one of the most collegial and collaborative communities.”  (Editor’s note: albeit less so than it used to be.)  BA flexed some “purpose driven” chops as well.  Craft brewers made $73 mil in charitable donations in 2017, noted Julia.  From the git go, Maine Brewing donated “1% to the planet,” said Dan, i.e. 1% of top line revs to environmental charities.

OR’s pFriem Family Brewers plans to build separate facility in Cascade Locks, OR, as new 22K sq-ft barrel-aging brewery and logistics/storage warehouse, while freeing up space to triple capacity at current Hood River facility to over 60K bbls/yr, co announced on its blog. “Growth has been a constant for the brewery since it was founded in 2012,” co wrote. Indeed, pFriem grew 50% to 10,780 bbls in 2017 in OR alone, and was up 21% thru Nov 2018, according to OR in-state shipments data. It still sells about 3/4 of its beer in OR, according to Willamette Week, suggesting that co surpassed ~17K bbls in toto last year. Now it’s leaning into growth further with “a more than three-fold production capacity expansion…based on increasing demand” and “forthcoming release of cans,” per release. In fact, it expects to brew “around” 5K bbls of newly launched cans in 2019, according to separate post. “Over the next two years,” pFriem will install new fermentation capacity as well as a second larger brewhouse and a canning line.” And “the Cascade Locks project will allow us to significantly expand our barrel aging program while consolidating our warehousing and cold storage operations in a beautiful new facility,” said co-founder/brewmaster Josh Pfriem. Co expects to be able to move into new Cascade Locks facility by Q1 2020.

Tree House Purchased ~100 Acres in CT for “Orchard & Farm Fermentory” Project; Cider Production

MA’s acclaimed Tree House Brewing is branching out with new “Tree House Orchard & Farm Fermentory,” co announced. Turns out, Tree House will cross state lines for the project, purchasing 93-acre Devon Point Farm property in Woodstock, CT for $1.6 mil, reported Hartford Business Journal among others. Just a 25-min drive from its HQ brewery in Charlton, MA. The land has over 60 acres of “agriculturally prime soil, grazing pasture for grass fed cattle, an existing produce and flower program, an appreciable number of heirloom apple trees, and vast expanses of land to be cultivated and planted for many many years,” per blog post. And “significant portion of the farm will be set aside for a long term orchard project.” On top of planned barrel room “for the fermentation, conditioning, and fruiting of various beverages,” Tree House will also begin making cider “to be set aside for fermentation and for fresh unpasteurized consumption this fall.” Recall, Tree House produced over 48K bbls in 2018 (see Jan 15 issue) after opening sizable new facility in 2017.

Taprooms, Pubs & Restaurants Dominate Small Brewer Expansion Plans from Portland to Portland  Two Oregon brewers announced plans for new locations: Eugene-based Oakshire plans to open a Beer Hall in Northeast Portland, while central-OR’s Sunriver plans to open a pub in Eugene, the co’s 3rd location, according to Brew Public reports. Just over the border in Vancouver, WA, the city’s Trap Door Brewing will open a new taproom and adjacent facility outfitted for barrel aging and wild fermentation, The Columbian wrote. Not too far away, Washougal-based brewpub Doomsday Brewing, which also operates a taproom/restaurant in Vancouver, announced plans to open its 3rd location, elsewhere in Vancouver.

Pennsylvania up-and-comer Tired Hands has been building out a bit of a food empire and now plans to open up a Philadelphia restaurant called St. Oner’s, the Inquirer reported. The 50-seat restaurant will serve Tired Hands beer, natch, as well as the co’s kombucha, natural wines and collab espresso project with the city’s ReAnimator Coffee, according to paper. Co already operates 2 on-premise focused locations in hometown of Ardmore, PA, plus “General Store” location for to-go sales.

Tallahassee’s Proof Brewing recently opened its new, larger facility, co announced. It brewed 6,000 bbls last yr, but new space allows it to expand production and host many more visitors in tasting room, all-weather patio and 8,000 sq-ft beer garden. It’s also the 3rd facility the co’s opened in just 7 yrs, the Tallahassee Democrat pointed out. In Tucson, AZ, Sentinel Peak Brewing just took over a restaurant elsewhere in the city and is rebranding it as a Sentinel Peak East, the Arizona Daily Star wrote. Finally, up in Maine, Threshers Brewing is opening a separate taproom in Thomaston, taking over a building that was once a tavern in the small town on Rte 1, northeast of Portland, the Penobscot Bay Pilot wrote.

Spruced up branding and spiced up beer lineups will hit beer shelves across the US early this year, aimed at renewing interest in breweries long familiar to beer drinkers and, in many cases, refreshing them with lower-abv, lighter, often fruit-forward offerings. One of largest craft players rolling out new core packaging this yr will be AB’s Goose Island, recall (see Monday’s issue). On Wednesday, brewer in Artisanal Brewing Ventures portfolio, Victory shared new packages and new brands debuting this year. Like many others, shift includes major focus on cans. New packaging sports greater visual alignment across the portfolio with varying color schemes calling out different beers. Core brands like Golden Monkey, HopDevil, Prima Pils and Sour Monkey will be joined by two new IPAs, No Brainer and Cloud Walker, a “hazy juicy IPA,” plus lower-alc riff on stronger Golden Monkey called Twisted Monkey. The 5.8% ABV Belgian blonde ale also includes mango for a bit of additional interest. Also announced this wk: Full Sail’s next addition to its Session lineup, Session Light. Hits key trends in beer these days: 100 calories, 6 carbs, 3.6% ABV and comes in slim 12oz cans to boot.

Allagash has a number of new packs and products debuting this year, too. Recall, it’s got 16oz cans of flagship White already in the market, joined by brand designed specifically for the same package, River Trip. The dry-hopped 4.8% Belgian-style table beer debuts this month. Additionally, the co intro’d new Sun Drift tea-infused brand over the weekend. Brewed with lemon zest and blended with black tea from local teamaker Little Red Cup, the beer “evokes the refreshing combination of lemonade and tea,” Allagash wrote. Speaking of lemon zest, Shiner announced release of new seasonal Lemon Pils, a “clean, crisp and refreshing Pilsner” brewed with lemon zest, at 4.8% ABV. Fellow Texas-based brewer Saint Arnold also looked to fruit to diversify its offerings, announcing plans to release its first cider this week. Saint Arnold Original Dry Cider debuts on draft around Houston next week, following by 12oz cans in Texas and Louisiana next month. Similarly, PA’s Troegs introduced a new series called Tart & Fruit, starting off with a boysenberry tart ale available in 6-pk 12oz cans late this month as well as part of co’s variety 12-pk of bottles.

Meanwhile, a handful of other regional brewers launched refreshed packaging early this year. That includes St. Louis stalwart Schlafly, which has updated packaging across its core lineup. New packages actually downplay Schlafly name and call greater attention to co’s style-based brand names. Ohio-based MadTree debuted new core can packages that, like others, utilize uniform overall design with varied colors by brand. Part of new packaging roll-out also includes new Shade, a blackberry tart ale, plus 12-pks of its PsycHOPathy IPA. Boston Beer-owned Angel City shared its new look for can packages today. Finally, getting back on its feet after new ownership and management came in last year, Green Flash is sporting a new look playing up its San Diego home, while also bringing back original recipe of flagship West Coast IPA.

Senators Ron Wyden (D-OR) and Roy Blunt (R-MO) re-introduced Craft Beverage Modernization and Tax Reform Act Wednesday afternoon, seeking to make permanent the temporary tax breaks offered alc bev producers in major 2017 tax reform. The breaks are broad and so is the support among supplier trade assns: Brewers Assn and Beer Institute, American Craft Spirits Assn and Distilled Spirits Council, Wine Institute, Wine America and US Assn of Cider Makers all support legislation. Measures included in bill would maintain current excise tax rates ($3.50 on first 60K bbls produced by brewers under 2 mil bbls; $16/bbl on first 6 mil bbls produced by all brewers and importers). Bill first intro’d in 2015, took 2 yrs to find larger tax vehicle but only included as temporary 2-yr change which expires at end of this yr. Notably, focus from primary sponsors in Senate remains on job creation and economic activity, particularly those created by small, craft producers. House version of bill expected to follow. Past versions garnered broad bipartisan support.

Port City’s Bill Butcher Testifies on Shutdown for House Committee  Providing more funds for brewers to reinvest in their bizzes has been key selling point for CBMTRA all along. At hearing for House Committee on Small Business and Community, also Wednesday, Port City Brewing founder Bill Butcher testified that tax break allowed co to “buy new tanks.” Co “hired more people” and “installed a brand new bottling line that would not have been possible” without lower excise tax rate. But that wasn’t focus of hearing, which instead was aimed at identifying impacts of partial government shutdown that stretched for over a month, ending late Jan.

“Running a brewery is capital and time intensive,” Bill told House committee members. And tho biz owners always try to mitigate risk, “unfortunately nobody could prepare for the impact” of shutdown causing most employees to be furloughed at “two major agencies” that serve small brewers, TTB and SBA. “As an industry, we get along with our regulators,” he acknowledged, sharing appreciation for reduced requirements for label approvals due to changes made over last few yrs. But new labels not approved with most TTB employees furloughed, causing major backlog. Recall, when gov’t reopened estimated processing time around 40 days. That rose to 53 days by Feb 1, Bill shared. It has come down slightly, now at 49 days, still 3-4 times rates that had become norm. Agency also now finally processing labels submitted in 2019.

Bill also noted furloughed SBA employees made him “unable to lock down an interest rate” on loan thru the agency, likely costing Port City “thousands more [dollars] over the lifetime of the loan.” With a second shutdown looming, as deal reopened govt only thru next week, Bill and other brewers “nervous.” So he had pair of similar asks for lawmakers: declare both TTB and SBA employees that process labels and loans “essential.” That would mean even if shutdown happens again, those employees would keep working. Small brewers “need reliable federal partners” and “can’t do our work without them,” he said.

Dogfish Head made another wholesaler switch in key mkt, moving from Oak Beverage to Sheehan Family Cos’ Union Dist and Craft Beer Guild of NY for NYC metro area distribution late last year. Oak “did great” for “over a decade” with Dogfish brands, founder/CEO Sam Calagione acknowledged to CBN, growing to ~150K cases in NYC metro.  But “we had a few years of disappointing trends” in “very competitive metro market,” even while adding more sales people and getting “more tactical and explicit with investments in the market,” said Sam. Co already had longstanding relationship with Sheehan Family, including the remainder of NY statewide. And ultimately, leadership at Oak and Sheehan were able to “sit down and find an amicable middle ground.” 

Union, Oak/Boening, and all suppliers involved in the trade were able to come up with a “win, win, win” scenario, Union Dist’s Chris Sheehan told CBN separately. Oak/Boening will receive Anchor brand for NYC metro, which is looking to align with parent co Sapporo’s network, as well as Yonkers Brewing and Singha (which also sought move) and further $$ compensation in exchange for rights to Dogfish. “Union Beer is very pleased that we were able to come to agreeable, fair terms and conditions,” Chris added.

Improving Trends for Dogfish; Up 11% in NY State; 20% with Union Dogfish trends in the NYC area and across the state have improved since the switch, Dogfish shared. Sales dipped 7% in NY state last year thru early Nov. Then, during “transition period,” co cut the decline to -2.4%. And sales jumped 11% in Jan, including Union up 20% for the mo, Dogfish’s northeast sales manager Ken Woodward shared. Sam gave shout out to both NYC sales team and new distrib partner for being up this much during “distracting” and “competitive” holiday period. On top of that, NYC is one of the mkts in which Dogfish Head is using its new YouTube marketing campaign, Sam shared. “All signs point to a great year” in the mkt.

Net-net, this is 3d such distrib move for Dogfish in 2 yrs, each including major metro mkts. Early last year, Dogfish moved to Breakthru Bev in IL as part of brand swap for Ballast Point into Gold Network/MC Cluster. Yet that swap was seemingly more from Constellation putting pressure on distribs to align with Ballast. In MA, Dogfish moved from Atlantic Importing to MC network statewide. Those and NYC swap go to show brand moves are being made, and distribs perhaps more willing to deal amid tuffer times in craftland.

About 70 workers at San Francisco’s Anchor Brewing sent letter to management yesterday asking to be recognized as part of Intl Longshoremen & Warehouse Union (ILWU), according to Splinter News report. “We’re proud to be Anchor, and we want Anchor to provide good jobs again,” workers wrote, arguing that they “should be paid enough to live in San Francisco.” Current wages for some of Anchor’s workers apparently not covering the city’s (in)famously high cost of living. Across Anchor operations, some work at new state minimum wage of $15/hr, other part-timers at $1-2/hr more, without receiving benefits as hours capped at 29 hours/wk for at least one employee who spoke to Splinter. A pair of full-timers make $18-21+/hr, or in range of $38-45K/yr, plus benefits, employees shared. Precise figures vary by source, but some suggest that such a salary might just barely cover median rent for an apartment in the city. A family of 4 earning over $117K per yr still rates as “low-income” in SF, according to govt figures cited by numerous sources, including the NY Times last yr.

Recall, Sapporo acquired Anchor in 2017. Workers didn’t cite major changes at the co following the deal, tho “they just took away our beer privilege,” or a free beer between shifts, one told Splinter. “This is just the beginning,” the employee continued. If management recognizes ILWU organization for Anchor workers, it would be first US craft brewery at which workers unionized, Splinter contends. Indeed, attention on how small brewers treat employees has seen marked uptick in last year or so, article points out, especially following kerfuffle caused by employees at MA’s Trillium Brewing late last fall.

Craft Brew Alliance’s lead brand family, Kona, receiving several new brands and plans for 2019, including “serious marketing waves” and handful of new brands/packages, co shared in video at AB’s distrib mtg, SAMCOM. Kona will double its marketing spend to $20 mil in 2019. Nearly 1/3 of spend will be on bigtime NCAA March Madness campaign, marking Kona’s “first ever” natl media buy coupled with “serious sales incentives.” Then too, Kona will put increased emphasis on Big Wave and Longboard with both 6pks and 18pks, which launched in HI last July along with handful of new innovations including Hibiscus Brut IPA (special release for 25th anniversary - draft only in HI this mo and goes national in cans Q3). Kona’s new 100K-bbl brewery in HI is set to open later this year. And Kona continues to ride Big Wave to new heights. Its flagship golden ale grew 24% off-prem and 35% on-prem in 2018. Net-net, add Kona to the list of established craft brands notably increasing mktg efforts. Kona has become a sizable brand family on its own via Kona plus strategy, remaining 10th largest craft brand family in the US, around 450K bbls shipped in 2018, we estimate.